(December 8, 2003) A California Chamber-led coalition named Californians to Stop Shakedown Lawsuits is preparing to start gathering petition signatures this month to put an initiative on the November 2004 ballot that would prohibit predatory trial lawyers from targeting businesses with frivolous 17200 lawsuits.

The initiative would amend the state unfair competition law, Business and Professions Code Section 17200, to close a loophole that has been widely abused across the state. Under current law, trial lawyers can file endless bounty hunter lawsuits against businesses, without anyone even having been harmed.

“California’s economy and businesses cannot withstand the additional costs being brought against them by unscrupulous attorneys who exploit current law,” said Allan Zaremberg, Chamber president and co-chair of the coalition. “This initiative will level the playing field by bringing California law in line with other states, while still protecting consumers against unfair business practices.”

Trial lawyers have used 17200 to file suits against companies that have not injured, damaged, or misled anyone and have not broken any law. 17200 has been used to leverage higher settlements, and incur thousands of dollars in legal fees, often based solely on allegations of unfair business practices. In many cases these lawyers do not even file 17200 lawsuits on behalf of a consumer or business.

These lawsuits have attacked every business sector, including retailers, general manufacturers, health care, finance, insurance, high tech, and many others. The most recent victims of these lawsuits are California’s small businesses, including auto repair shops, convenience stores, nail salons, travel agents and restaurants.

The Chamber has repeatedly sponsored and supported legislation to reform 17200, as more and more businesses are targeted with extortionary lawsuits. Despite overwhelming evidence of shakedown lawsuits across the state, trial lawyer groups have blocked all legitimate reform attempts in the Legislature. For these reasons, the Chamber and the coalition found it necessary to sponsor a ballot initiative to significantly curb 17200 lawsuit abuses.

The initiative sponsored by Californians to Stop Shakedown Lawsuits would amend 17200 so that private lawyers can no longer file suits without clients and without evidence of harm or financial loss. Also, private lawyers will no longer be able to use 17200 to file “representative actions” on behalf of the general public; instead they will be required to use the class action process that affords court supervision and protections for plaintiffs and defendants. District attorneys and the Attorney General will continue to be able to use 17200 to protect the general public and business from business practice violations - in fact, the initiative will dedicate more funding to this work.

Petition gathering for the ballot initiative to reform California’s unfair competition law is expected to start this month, once the official title and summary is issued by the Attorney General. Petitions and additional information regarding the 17200 reform initiative are available from the coalition website: www.stopshakedownlawsuits.com.

Staff Contact: Valerie Nera